Retirement Industry Uses Grassroots to Lobby Above Its Weight

With federal budget negotiations over the
fiscal cliff perceived to pose a serious threat
to retirement benefits, an industry lobbying group is rapidly
building grassroots support to preserve them.

The Arlington, Virginiabased American Society of
Pension Professionals & Actuaries (ASPPA), which represents
11,000 professionals who service 401(k) plans  including
plan administrators, consultants, attorneys, actuaries and
accountants ­ has launched a Save My
401(k) campaign whose goal is to generate 250,000 email
messages from participants in 401(k) plans to their members of
Congress over the coming six months, according to Brian Graff,
executive director and chief executive officer of ASPPA. The
campaign has generated close to 40,000 email messages so
far.

Participants are helping us deliver the message that
retirement incentives are important and [members of Congress]
need to be very careful if they are thinking of cutting
them, Graff says.

The campaigns scope appears to be unprecedented in the
world of Washington organizations that defend retirement
benefits. Nothing like that has been tried before in the
retirement world, contends Graff.

The target audience for the campaign is large  70
million plan participants. We wanted to get regular
participants, average Americans, who care about their 401(k)s
to express their concerns to their members of Congress,
Graff explains.

ASPPA began considering a grassroots campaign early in the
year, as members began to worry that Congress might severely
curtail limits on tax-deferred contributions to 401(k) plans in
the ongoing and contentious battle over federal budget deficits
in Washington.

The current annual limit for individual contributions to
401(k) plans is $17,000, while employees aged 55 and older can
make an additional catch-up contribution of $5,500. The overall
annual limit for employee contributions plus employer-matching
contributions and profit sharing is $50,000.

For maximum impact, the campaign was timed to launch just as
talks over the fiscal cliff began to heat up and dominate news
coverage. The campaign will be continuing well into next year
because ASPPA also wants to influence the debate over the
potential course of broad tax reform efforts that many now
expect in the new Congress.

Over the last year leaders within the 401(k) service
industry and ASPPA began to put together the details of how a
campaign might work, taking cues from President Obamas
use of social networks in his reelection campaign.

Our thinking was, frankly, to some degree
piggybacking on the success of the Obama campaign,
Graff explains. That campaign showed, he explains, that
leveraging the power of social media would be a much
more effective way of getting the messaging across than the
typical TV commercial on a Sunday talk show.

Why was it important to take the campaign to the public at
all? Why not rely on lobbying and campaign donations?
Our industry is fairly small relative to other
industries and needs to find a way to expand its modest
presence, explains ASPPA president Barry Levy, who is also
president of Levy & Associates, a plan administrator
based in Fort Lauderdale, Florida.

By contrast, Levy adds, lobbying groups for other
industries, such as home builders and mortgage companies, can
have thousands of people on the Hill in opposition to
restrictions on the deductibility of mortgage interest.

Compilations of lobbying dollars bear out this worry.
While ASPPA spent $237,904 so far this year lobbying, the
National Association of Realtors spent $25.9 million, making
them second only to the U.S. Chamber of Commerce at $95.6
million, according to the Center for Responsive Politics. And
the National Association of Home Builders spent $2.01
million.

In the battle over which tax preferences may be reduced or
eliminated, ASPPA is worried that the defenders of other
preferences in the tax code would have a stronger presence in
Washington than the defenders of tax deferral limits for the
401(k). Further, the whole category of tax expenditures for
employer-sponsored retirement plans represents a very large
target of $147 billion a year, based on estimates by the
Joint Tax Committee in Congress. Tax expenditures are
calculations of lost tax revenues from income deductions and
deferrals, as well as the exclusion from income of designated
expense categories.

Based on the past, ASPPA has cause to worry. In 1986, when
all the horse-trading over tax preferences was done to make
it possible to lower the overall tax rate, the limits on
deductions for 401(k) plans took a 70 percent hit.

The industry was caught flatfooted in the tax reform
in 1986, recalls Levy. There was very little
advocacy for the pension system. A lot of benefits were
severely curtailed, he adds. We did not want to
see that happen again during this round.

The campaign scored major media coverage on its November
26 launch date, when Reuters ran a story early that morning
by Jessica Toonkel titled U.S. 401(k) Servicing
Industry Sounds Alarm over Tax Changes. In the
afternoon CNN News Room ran a segment by Alison Kosik who
reported on the possibility that lower contribution limits
would lead employers, especially smaller businesses, to drop
their plans. Politico also ran a story on the campaign on the
launch date.

Coverage has since also appeared in such press outlets as
CBS-affiliate WUSA-TV in Washington, D.C., USA Today (which
owns WUSA), CNBCs Closing Bell, Time, Bloomberg Radio,
Bloomberg Business Week and the Wall Street Journal and its
online affiliate Market Watch.

This initial coverage has driven potential grassroots
activists to a dedicated website (savemy401k.com) with this
banner: Tell Congress to keep their hands off your
RETIREMENT SAVINGS! In addition, the campaign maximizes
its social media presence with a Facebook page (Save My
401k), a LinkedIn group (Save My 401k) and Twitter feeds
(#savemy401k and #ProtectMyPiggy).

ASSPA is also enlisting the help of its member firms to
send out Save My 401(k) materials to their clients so they
can, if they wish, make the materials available to their
employees.

CPI Qualified Plan Consultants, of Great Bend, Kansas, is
a plan recordkeeper that has taken up the cause. We
feel this is the first time weve seen a real threat to
the retirement plan accounts of employees, says Jon
Prescott, president of CPI.

CPI keeps records for 8,700 corporate plans with half a
million participants holding $15 billion in their retirement
accounts, according to Prescott.

Last week CPI sent out an email communication to all its
clients informing them of the Save My 401(k) campaign and
providing them with links and materials they could forward to
their employees.

Prescott is pleased with what hes hearing from his
clients, who report they are forwarding the materials on to
their employees. The employer response has been strong:
Wow, thanks for letting me know. Thanks for making it
so easy to communicate with Congress, he
says.

CPI plans to send another mass mailing to its clients next
week as a reminder, says Prescott, followed by a
mailing in late January or early February.

This threat is not going away, he says.
I understand where Congress is coming from. They are
looking for sources of revenue, he adds.

Prescott urges Congress to keep in mind that as it looks
for ways to raise revenue, it should keep in mind that the
tax deferral treatment for contributions to 401(k) plans will
provide revenues in the future that could otherwise be lost,
while also increasing retirement saving. We need a
long-term view and not a short-term view in Washington,
he says.

Staunton Steam Laundry of Staunton, Virginia, a client of
Levy & Associates, is one of the small employers that
volunteered to inform its employees of the Save My 401(k)
campaign. The company, founded in 1912, is today primarily a
provider of uniform and linen rentals, while also still
maintaining a small laundry and dry cleaning business.

The company is posting flyers on the campaign, as well as
sending information by email to employees, according to the
companys president and chief executive officer Lee Ann
Beam. We will remind employees of the importance we
place on their participating in the 401(k) so they can
enhance their own retirement, using the campaign to
remind employees to participate in the plan or raise the
share of pay they contribute. The company will also tell
employees about the campaign in their next monthly
meeting.

Fifty-two of Staunton Steam Laundrys 74 full-time
and part-time workers eligible to participate are
participating in the companys 401(k), a high response
in an hourly workforce earning $10 to $11 an hour. The
company matches dollar-for-dollar the first 5 percent of
income, according to Beam. Some hourly employees contribute
beyond the amount needed to earn a match.

To be sure, ASPPA is not relying entirely on its
grassroots campaign and continues its traditional lobbying to
plead with members of Congress to do everything they can to
keep in place the current limits on tax deferral. I
havent had anyone say no yet, says
Graff.

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